Private Payrolls Jump More Than Expected in March
In a welcome sign for the US labor market, private payrolls soared beyond expectations in March, according to the latest ADP monthly employment report. The report revealed that private sector employment increased by a robust 184,000 jobs during the month, marking a significant uptick from the 155,000 jobs added in February and representing the largest increase since July 2023. Economists had anticipated a more modest increase of 148,000 jobs, making the March figures particularly noteworthy.
The bulk of the job gains came from the service sector, which added 142,000 new jobs. Key contributors to this surge included the leisure and hospitality sector (+63,000), trade/transportation/utilities (+29,000), and the financial and education sectors, each creating 17,000 new jobs. Meanwhile, goods-producing industries also made a solid contribution, adding 42,000 jobs, largely driven by a notable increase in construction employment, which saw the addition of 33,000 jobs.
Regional data from the report revealed that job gains were fairly distributed across the country, with the South leading the way by adding 91,000 jobs, followed by the West (+53,000), the Midwest (+28,000), and the Northeast (+20,000). This broad-based increase in employment underscores the strength and resilience of the US labor market, with multiple regions contributing to the overall growth.
A notable trend highlighted in the report was the divergence in wage growth between job-changers and job-stayers. Wages for individuals changing jobs surged back to double-digit growth, with a remarkable 10 percent increase. This marks the second consecutive month of substantial gains for job-changers. In contrast, for those who remained in their current positions, wage gains remained steady, with year-over-year pay increases holding flat at 5.1 percent. This trend suggests that workers who are willing to change jobs are reaping the benefits of increased demand for their skills in the labor market.
Nela Richardson, Chief Economist at ADP, commented on the surprising nature of the March report, noting, “March was surprising not just for the pay gains, but the sectors that recorded them.” Richardson highlighted that the three sectors experiencing the most significant increases in wages for job-changers were construction, financial services, and manufacturing. This suggests that wage growth is not only prevalent in service sectors but is also extending into goods-producing industries, indicating a broad-based acceleration in pay across the economy.
Despite concerns about inflationary pressures, Richardson pointed out that while inflation may be cooling, ADP’s data indicates that pay is heating up in both goods and services sectors. This suggests that employers are responding to labor market dynamics by offering more competitive wages to attract and retain talent, further bolstering consumer spending and economic growth.
Overall, the March ADP employment report provides a positive outlook for the US labor market, with robust job gains and accelerating wage growth signaling strength and resilience amidst ongoing economic challenges. As the economy continues to recover from the pandemic, the labor market remains a key barometer of progress, and the latest data indicates that momentum is firmly on the side of job seekers and workers alike.
